Small employers, more help in starting up a 401(k) plan is on the way.
Empower today unveiled plans to launch “Ready Select” in mid-2024—a new digital solution that removes access barriers and gives more small employers the ability to establish workplace retirement plans for their employees.
“The time to eliminate the access gap is now, and we’re taking this head on.”
Empower President and CEO Edmund F. Murphy III
The solution presents advisors and third-party administrators (TPAs) with a new means of setting up a retirement plan with an employer that reduces complexity and cost while streamlining administrative duties. Ready Select is specifically designed for small and start-up plans with up to $1 million in assets.
Empower noted in a press release announcing Ready Select that historically, complexity and administrative burdens have presented barriers to the creation of workplace retirement plans for small employers and start-up companies.
Management teams are often busy with the needs of growing their business, and taking on the additional work of providing retirement benefits can be daunting. According to the Small Business Administration, there are an estimated 33.2 million small businesses in the U.S. and approximately 62 million individuals who work for these employers. These employers represent many of the estimated 33% to 50% of private sector workers who are not currently covered by a workplace retirement plan.
“This game-changing innovation from Empower delivers retirement services to more American workers who deserve the chance to have a secure retirement,” said Empower President and CEO Edmund F. Murphy III. “The time to eliminate the access gap is now, and we’re taking this head on.”
“We have the technology, the know-how and the support of advisor and TPA partners to address this problem for the millions of Americans who need a retirement plan,” said Murphy.
Murphy applauded the public-private partnership that is inherent in the nation’s workplace savings system, which has played a critical role in helping to narrow the access gap.
He noted that in recent years, Congress passed the 2019 SECURE Act and SECURE 2.0 in 2022, which have made retirement plans more accessible to more workers. For example, the retirement plan coverage rate of the lowest-income families increased by 25% during the three-year-period of 2019-2022—more than double the growth rate of any other income segment during the period, including years immediately following the enactment of the SECURE Act of 2019.
“Together, Congress and retirement industry advocates have created terrific improvements that create the opportunity for workplace retirement plans to become much more accessible,” said Rich Linton, President and Chief Operating Officer at Empower. “We know that through highly effective public policy and on-going investments in innovation we can further reduce employer burdens and take down barriers of entry into the retirement system,” said Linton.
Perks of Ready Select
Empower noted that Ready Select offers a streamlined, end-to-end 401(k) plan set-up process that simplifies plan features and design decision points. The system includes integrated investment advisory services through a third-party ERISA fiduciary. The new application helps to reduce the implementation timeline, financial and administrative cost of sponsoring a 401(k) plan for small employers, so that advisors can help business owners spend less time administering their workplace benefits.
After working with an advisor or TPA to generate an on-demand proposal and complete plan setup, small business owners and employees gain access to the same digital experience, financial wellness, and education programs that Empower provides to some of the nation’s largest corporate, non-profit, and governmental plans.
Ready Select derives its name from Empower Select, a market-leading plan solution that pairs time-saving service and administrative features, with a comprehensive marketplace of investment products.
“Advisors and TPAs who use Ready Select will have the ability to help support small employers with cost-effective retirement plan choices that best meets the needs of their workforce,” said Executive Vice President for Core Markets for Empower, Joseph Smolen, Governing Board Chair of the SPARK Institute, a retirement industry advocacy organization.
Denver-based Empower administers approximately $1.5 trillion in assets for more than 18.5 million investors through the provision of retirement plans, advice, wealth management and investments.
For calendar year 2023, Empower reported it achieved funded and committed sales of more than $10 billion in new retirement plan sales, amounting to some 3,300 in new plans and covering the retirement needs of approximately 250,000 new participants. In addition to those figures, Empower said it has developed its presence in the market for new startup plans and created approximately 800 new plans in conjunction with advisors and employers who wish to offer retirement benefits to their employees.
Last week, Empower announced its latest partnerships with several asset management and insurance providers to offer a range of in-plan and out-of-plan guaranteed income solutions to its defined contribution (DC) plans.
SEE ALSO:
• Empower Introduces Newest Suite of Retirement Income Partnerships
• 2023 Small 401(k) Plan Sales at Empower Top $10 Billion